Press Release

Net income was $2.80 per share, including net positive adjustment
items of $0.15 per share. Adjusted net income was $2.65 per share
(refer to the GAAP reconciliation table).

Medical enrollment has increased by approximately 0.3 million
members in 2017, or 0.8%, totaling approximately 40.3 million members
as of September 30, 2017.

Company now expects medical enrollment to grow by nearly 100 - 300
thousand members for the full year 2017.

Full year 2017 GAAP net income is now expected to in the range of
$10.80 - $10.90 per share. Full year adjusted net income is now
expected to be in the range of $11.90 - $12.00 per share (refer to the
GAAP reconciliation table).

INDIANAPOLIS--(BUSINESS WIRE)--Oct. 25, 2017--
Anthem, Inc. (NYSE: ANTM) today announced that third quarter 2017 net
income was $746.9 million, or $2.80 per share. These results included
net positive adjustment items of $0.15 per share. Net income in the
third quarter of 2016 was $617.8 million, or $2.30 per share, which
included net negative adjustment items of $0.15 per share.

Excluding the items noted in each period, adjusted net income was $2.65
per share in the third quarter of 2017 compared to the adjusted net
income of $2.45 per share in the prior year quarter (refer to the GAAP
reconciliation table for the most directly comparable measure calculated
in accordance with U.S. generally accepted accounting principles, or
“GAAP”).

“Our solid third quarter 2017 results reflect continued operating
momentum across our Commercial and Government businesses and our focus
on improving affordability and choice for our customers. We are
committed to advancing our ability to improve the quality and
affordability of healthcare," said Joseph R. Swedish, chairman,
president and chief executive officer.

“We continue to be pleased with the execution of our business segments
during 2017 and have increased our 2017 outlook to reflect the strong
performance during the third quarter,” said John Gallina, executive vice
president and chief financial officer.

CONSOLIDATED HIGHLIGHTS

Membership: Medical enrollment totaled approximately 40.3 million
members at September 30, 2017, an increase of 347 thousand members, or
0.9 percent, from 39.9 million at September 30, 2016. Commercial &
Specialty Business enrollment increased by 278 thousand medical members
as the Company experienced growth in both self-funded and fully-insured
Local Group businesses, partially offset by a decline in membership in
the National and Individual businesses. Enrollment also grew by 61
thousand in the Medicare business and 16 thousand in the Medicaid
business.

Medical enrollment declined by 130 thousand, or 0.3 percent,
sequentially during the third quarter of 2017. The decrease reflected
enrollment declines in the National, Medicaid, and Individual
businesses, partially offset by growth in the Large Group self-funded
and Medicare businesses.

Operating Revenue: Operating revenue was $22.1 billion in the
third quarter of 2017, an increase of $1.0 billion, or 4.6 percent,
versus the $21.1 billion in the prior year quarter. The growth in
revenue reflected premium rate increases to cover overall cost trends
across our business. Additionally, the increase was driven by higher
enrollment in the Medicare and Medicaid businesses as well as Local
Group insured and self-funded businesses. These increases were partially
offset by the impact of the one year waiver of the health insurance tax
in 2017 and lower current year risk adjustment accruals during the
quarter.

Benefit Expense Ratio:The benefit expense ratio was 87.0
percent in the third quarter of 2017, an increase of 150 basis points
from 85.5 percent in the prior year quarter. The increase, as expected,
was largely driven by the impact of the one year waiver of the health
insurance tax in 2017. The increase was partially offset by the impact
of a retroactive revenue adjustment in the Medicaid business and
improved medical cost performance in the Individual and Large Group
businesses.

Medical claims reserves established at December 31, 2016 developed
better than the Company’s expectation during the first nine months of
2017.

Medical Cost Trend:For the full year 2017, the Company
now expects underlying Local Group medical cost trend to be in the range
of 6.5% - 7.0%, with a bias toward the low end of the range.

Days in Claims Payable:Days in Claims Payable (“DCP”) was
40.5 days as of September 30, 2017, unchanged from 40.5 days as of June
30, 2017.

SG&A Expense Ratio: The SG&A expense ratio was 13.6 percent
in the third quarter of 2017, a decrease of 120 basis points from 14.8
percent in the third quarter of 2016. The decrease, as expected, was
primarily driven by the impact of the one year waiver of the health
insurance tax in 2017 and the impact of fixed cost leverage on operating
revenue growth. These items were partially offset by the impact of
increased spend to support growth initiatives during the current year
quarter.

Operating Cash Flow: Operating cash flow was $2.4 billion, or 3.2
times net income in the third quarter of 2017, and approximately $5.5
billion, or 2.1 times net income for the first nine months of 2017. The
Company now expects its full year 2017 operating cash flow to be greater
than $4.0 billion.

Share Repurchase Program: During the third quarter of 2017, the
Company repurchased 5.9 million shares of its common stock for $1.1
billion, or a weighted-average price of $189.85. During the first nine
months of 2017, the Company repurchased 8.8 million shares of its common
stock for $1.6 billion, or a weighted average price of $186.80. As of
September 30, 2017, the Company had approximately $2.5 billion of
Board-approved share repurchase authorization remaining.

Cash Dividend: During the third quarter of 2017, the Company paid
a quarterly dividend of $0.70 per share, representing a distribution of
cash totaling $181.4 million.

On October 24, 2017, the Audit Committee declared a fourth quarter 2017
dividend to shareholders of $0.70 per share. On an annualized basis,
this equates to a dividend of $2.80 per share. The fourth quarter
dividend is payable on December 21, 2017 to shareholders of record at
the close of business on December 5, 2017.

Investment Portfolio & Capital Position: During the third
quarter of 2017, the Company recorded net realized gains on financial
instruments totaling $114.7 million and other-than-temporary impairment
losses totaling $5.6 million. During the third quarter of 2016, the
Company recorded net realized gains of $88.8 million and
other-than-temporary impairment losses totaling $11.0 million.

As of September 30, 2017, the Company’s net unrealized gain position in
the investment portfolio was $860.8 million, consisting of net
unrealized gains on equity and fixed maturity securities totaling $423.9
and $436.9 million, respectively. As of September 30, 2017 cash and
investments at the parent company totaled approximately $2.0 billion.

REPORTABLE SEGMENTS

Anthem, Inc. has three reportable segments: Commercial & Specialty
Business (comprised of the Local Group, National Accounts, Individual
and Specialty businesses); Government Business (comprised of the
Medicaid and Medicare businesses, National Government Services, and the
Federal Employee Program); and Other (comprised of unallocated corporate
expenses and certain other businesses that do not meet the quantitative
thresholds for separate reportable segment disclosure).

Anthem, Inc.

Reportable Segment Highlights

(Unaudited)

(In millions)

Three Months Ended September 30

Nine Months Ended September 30

2017

2016

Change

2017

2016

Change

Operating Revenue

Commercial & Specialty Business

$10,052.1

$9,656.8

4.1

%

$30,650.5

$29,064.9

5.5

%

Government Business

12,037.3

11,462.4

5.0

%

35,946.4

33,627.4

6.9

%

Other

7.3

6.0

21.7

%

17.3

16.8

3.0

%

Total Operating Revenue1

$22,096.7

$21,125.2

4.6

%

$66,614.2

$62,709.1

6.2

%

Operating Gain / (Loss)

Commercial & Specialty Business

$534.6

$637.7

(16.2

)%

$2,804.9

$3,006.0

(6.7

)%

Government Business

457.5

478.9

(4.5

)%

1,069.4

1,254.4

(14.7

)%

Other

(10.1

)

(38.5

)

NM2

(79.9

)

(111.7

)

NM2

Total Operating Gain1

$982.0

$1,078.1

(8.9

)%

$3,794.4

$4,148.7

(8.5

)%

Operating Margin

Commercial & Specialty Business

5.3

%

6.6

%

(130) bp

9.2

%

10.3

%

(110) bp

Government Business

3.8

%

4.2

%

(40) bp

3.0

%

3.7

%

(70) bp

Total Operating Margin1

4.4

%

5.1

%

(70) bp

5.7

%

6.6

%

(90) bp

(1) See “Basis of Presentation.”

(2) "NM" = calculation not meaningful.

Commercial & Specialty Business: Operating gain in the
Commercial & Specialty Business segment totaled $534.6 million in the
third quarter of 2017, a decrease of $103.1 million, or 16.2 percent,
from $637.7 million in the third quarter of 2016. The decrease was
driven by increased spend to support growth initiatives during the
current year quarter and the impact of the one year waiver of the health
insurance tax in 2017. The decrease was partially offset by improved
medical cost performance in the Individual and Large Group businesses.

Government Business: Operating gain in the Government Business
segment was $457.5 million in the third quarter of 2017, a decrease of
$21.4 million, or 4.5 percent, from $478.9 million in the third quarter
of 2016. The decrease reflects increased spend to support growth
initiatives during the current year quarter and the impact of the one
year waiver of the health insurance tax in 2017. These decreases were
partially offset by the timing impact of a retroactive revenue
adjustment in the Medicaid business.

Other: The Company reported an operating loss of $10.1 million in
the Other segment for the third quarter of 2017, compared with an
operating loss of $38.5 million in the prior year quarter. The decrease
was primarily driven by lower terminated Cigna acquisition related
expenses.

OUTLOOK

Full Year 2017*:

Net income is now expected to be in the range of $10.80 - $10.90 per
share, including approximately $1.10 per share of net unfavorable
items. Excluding these items, adjusted net income is now expected to
be in the range of $11.90 - $12.00 per share (refer to the GAAP
reconciliation table).

Medical membership is now expected to be in the range of 40,000,000 -
40,200,000. Fully insured membership is now expected to be in the
range of 15,100,000 - 15,200,000 and self-funded membership is now
expected to be in the range of 24,900,000 - 25,000,000.

Operating revenue is expected to be in the range of $88.5 - $89.5
billion.

Benefit expense ratio is now expected to be in the range of 86.8% plus
or minus 30 basis points.

SG&A ratio is now expected to be in the range of 13.8% plus or minus
30 basis points.

Operating cash flow is now expected to be greater than $4.0 billion.

* This outlook includes the impact of the Penn Treaty assessments,
2015 cyber attack litigation settlement, and terminated Cigna
acquisition transaction costs incurred during the first nine months of
2017, but does not include any transaction or legal costs associated
with the terminated Cigna acquisition beyond those incurred in the first
nine months of 2017.

Basis of Presentation

Operating revenue and operating gain are the key measures used by
management to evaluate performance in each of its reporting segments,
allocate resources, set incentive compensation targets and to forecast
future operating performance. Operating gain is calculated as total
operating revenue less benefit expense and selling, general and
administrative expense. It does not include net investment income, net
realized gains/losses on financial instruments, other-than-temporary
impairment losses recognized in income, interest expense, amortization
of other intangible assets, gains/losses on extinguishment of debt or
income taxes, as these items are managed in a corporate shared service
environment and are not the responsibility of operating segment
management (refer to the GAAP reconciliation tables).

Management will host a conference call and webcast today at 8:30 a.m.
Eastern Daylight Time (“EDT”) to discuss the company’s third quarter
results and outlook. The conference call should be accessed at least 15
minutes prior to the start of the call with the following numbers:

800-230-1092 (Domestic)

800-475-6701 (Domestic Replay)

612-288-0337 (International)

320-365-3844 (International Replay)

An access code is not required for today’s conference call. The access
code for the replay is 403160. The replay will be available from 11:00
a.m. EDT today, until the end of the day on November 9, 2017. The call
will also be available through a live webcast at www.antheminc.com
under the “Investors” link. A webcast replay will be available following
the call.

About Anthem, Inc.

Anthem is working to transform health care with trusted and caring
solutions. Our health plan companies deliver quality products and
services that give their members access to the care they need. With over
73 million people served by its affiliated companies, including more
than 40 million within its family of health plans, Anthem is one of the
nation’s leading health benefits companies. For more information about
Anthem’s family of companies, please visit www.antheminc.com/companies.

Anthem, Inc.

Membership Summary

(Unaudited and in Thousands)

Change from

September 30,

September 30,

December 31,

September 30,

December 31,

Medical Membership

2017

2016

2016

2016

2016

Customer Type

Local Group

15,857

15,363

15,429

3.2

%

2.8

%

Individual

1,696

1,757

1,664

(3.5

)%

1.9

%

National:

National Accounts

7,718

7,768

7,741

(0.6

)%

(0.3

)%

BlueCard®

5,491

5,596

5,550

(1.9

)%

(1.1

)%

Total National

13,209

13,364

13,291

(1.2

)%

(0.6

)%

Medicare

1,498

1,437

1,438

4.2

%

4.2

%

Medicaid

6,433

6,417

6,527

0.2

%

(1.4

)%

FEP

1,564

1,572

1,570

(0.5

)%

(0.4

)%

Total Medical Membership

40,257

39,910

39,919

0.9

%

0.8

%

Funding Arrangement

Self-Funded

24,945

24,671

24,688

1.1

%

1.0

%

Fully-Insured

15,312

15,239

15,231

0.5

%

0.5

%

Total Medical Membership

40,257

39,910

39,919

0.9

%

0.8

%

Reportable Segment

Commercial & Specialty Business

30,762

30,484

30,384

0.9

%

1.2

%

Government Business

9,495

9,426

9,535

0.7

%

(0.4

)%

Total Medical Membership

40,257

39,910

39,919

0.9

%

0.8

%

Other Membership

Life and Disability Members

4,717

4,689

4,732

0.6

%

(0.3

)%

Dental Members

5,803

5,454

5,486

6.4

%

5.8

%

Dental Administration Members

5,351

5,377

5,294

(0.5

)%

1.1

%

Vision Members

6,905

6,111

6,388

13.0

%

8.1

%

Medicare Advantage Part D Members

693

619

629

12.0

%

10.2

%

Medicare Part D Standalone Members

320

353

350

(9.3

)%

(8.6

)%

Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

(In millions, except per share data)

Three Months EndedSeptember 30

2017

2016

Change

Revenues

Premiums

$

20,797.0

$

19,786.1

5.1

%

Administrative fees

1,289.2

1,330.0

(3.1

)%

Other revenue

10.5

9.1

15.4

%

Total operating revenue

22,096.7

21,125.2

4.6

%

Net investment income

220.2

200.9

9.6

%

Net realized gains on financial instruments

114.7

88.8

29.2

%

Other-than-temporary impairment losses on investments:

Total other-than-temporary impairment losses on investments

(5.6

)

(15.1

)

(62.9

)%

Portion of other-than-temporary impairment losses recognized in
other comprehensive income

—

4.1

(100.0

)%

Other-than-temporary impairment losses recognized in income

(5.6

)

(11.0

)

(49.1

)%

Total revenues

22,426.0

21,403.9

4.8

%

Expenses

Benefit expense

18,103.6

16,922.5

7.0

%

Selling, general and administrative expense:

Selling expense

347.9

338.5

2.8

%

General and administrative expense

2,663.2

2,786.1

(4.4

)%

Total selling, general and administrative expense

3,011.1

3,124.6

(3.6

)%

Interest expense

150.5

172.9

(13.0

)%

Amortization of other intangible assets

41.9

47.4

(11.6

)%

Total expenses

21,307.1

20,267.4

5.1

%

Income before income tax expense

1,118.9

1,136.5

(1.5

)%

Income tax expense

372.0

518.7

(28.3

)%

Net income

$

746.9

$

617.8

20.9

%

Net income per diluted share

$

2.80

$

2.30

21.7

%

Diluted shares

267.0

268.1

(0.4

)%

Benefit expense as a percentage of premiums

87.0

%

85.5

%

150

bp

Selling, general and administrative expense as a percentage of total
operating revenue

13.6

%

14.8

%

(120

)bp

Income before income taxes as a percentage of total revenue

5.0

%

5.3

%

(30

)bp

Anthem, Inc.

Consolidated Statements of Income

(Unaudited)

(In millions, except per share data)

Nine Months EndedSeptember 30

2017

2016

Change

Revenues

Premiums

$

62,561.4

$

58,723.0

6.5

%

Administrative fees

4,031.3

3,956.8

1.9

%

Other revenue

21.5

29.3

(26.6

)%

Total operating revenue

66,614.2

62,709.1

6.2

%

Net investment income

627.6

566.9

10.7

%

Net realized gains (losses) on financial instruments

138.2

(23.8

)

NM1

Other-than-temporary impairment losses on investments:

Total other-than-temporary impairment losses on investments

(22.5

)

(134.1

)

(83.2

)%

Portion of other-than-temporary impairment losses recognized in
other comprehensive income

1.6

30.5

(94.8

)%

Other-than-temporary impairment losses recognized in income

(20.9

)

(103.6

)

(79.8

)%

Total revenues

67,359.1

63,148.6

6.7

%

Expenses

Benefit expense

53,563.6

49,266.5

8.7

%

Selling, general and administrative expense:

Selling expense

1,042.0

1,039.9

0.2

%

General and administrative expense

8,214.2

8,254.0

(0.5

)%

Total selling, general and administrative expense

9,256.2

9,293.9

(0.4

)%

Interest expense

575.4

545.7

5.4

%

Amortization of other intangible assets

124.3

145.7

(14.7

)%

Total expenses

63,519.5

59,251.8

7.2

%

Income before income tax expense

3,839.6

3,896.8

(1.5

)%

Income tax expense

1,227.5

1,795.4

(31.6

)%

Net income

$

2,612.1

$

2,101.4

24.3

%

Net income per diluted share

$

9.70

$

7.84

23.7

%

Diluted shares

269.4

267.9

0.6

%

Benefit expense as a percentage of premiums

85.6

%

83.9

%

170

bp

Selling, general and administrative expense as a percentage of total
operating revenue

13.9

%

14.8

%

(90

)bp

Income before income taxes as a percentage of total revenue

5.7

%

6.2

%

(50

)bp

(1) "NM" = calculation not meaningful

Anthem, Inc.

Consolidated Balance Sheets

(In millions)

September 30, 2017

December 31, 2016

Assets

(Unaudited)

Current assets:

Cash and cash equivalents

$

6,097.2

$

4,075.3

Investments available-for-sale, at fair value:

Fixed maturity securities

18,697.3

17,163.1

Equity securities

1,452.6

1,468.5

Other invested assets, current

16.9

15.8

Accrued investment income

158.3

164.5

Premium and self-funded receivables

5,692.0

5,860.8

Other receivables

2,130.2

2,536.6

Income taxes receivable

—

168.7

Securities lending collateral

907.2

1,079.8

Other current assets

1,822.0

1,781.8

Total current assets

36,973.7

34,314.9

Long-term investments available-for-sale, at fair value:

Fixed maturity securities

533.3

524.4

Equity securities

32.3

31.4

Other invested assets, long-term

2,442.1

2,240.5

Property and equipment, net

2,049.2

1,977.9

Goodwill

17,587.8

17,561.2

Other intangible assets

7,840.6

7,964.9

Other noncurrent assets

850.9

467.9

Total assets

$

68,309.9

$

65,083.1

Liabilities and shareholders’ equity

Liabilities

Current liabilities:

Policy liabilities:

Medical claims payable

$

7,963.9

$

7,892.6

Reserves for future policy benefits

72.1

71.8

Other policyholder liabilities

2,471.7

2,221.1

Total policy liabilities

10,507.7

10,185.5

Unearned income

1,950.2

971.9

Accounts payable and accrued expenses

4,454.2

4,014.9

Income taxes payable

187.5

—

Security trades pending payable

164.7

93.5

Securities lending payable

906.4

1,078.9

Short-term borrowings

1,180.0

440.0

Current portion of long-term debt

1,273.4

928.4

Other current liabilities

3,788.4

3,581.3

Total current liabilities

24,412.5

21,294.4

Long-term debt, less current portion

13,777.3

14,358.5

Reserves for future policy benefits, noncurrent

618.5

666.1

Deferred tax liabilities, net

2,609.3

2,779.9

Other noncurrent liabilities

944.0

883.8

Total liabilities

42,361.6

39,982.7

Shareholders’ equity

Common stock

2.6

2.6

Additional paid-in capital

8,765.1

8,805.1

Retained earnings

17,306.6

16,560.6

Accumulated other comprehensive loss

(126.0

)

(267.9

)

Total shareholders’ equity

25,948.3

25,100.4

Total liabilities and shareholders’ equity

$

68,309.9

$

65,083.1

Anthem, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In millions)

Nine Months Ended September 30

2017

2016

Operating activities

Net income

$2,612.1

$2,101.4

Adjustments to reconcile net income to net cash provided by
operating activities:

Net realized (gains) losses on financial instruments

(138.2

)

23.8

Other-than-temporary impairment losses recognized in income

20.9

103.6

Loss on disposal of assets

3.5

3.5

Deferred income taxes

(237.5

)

81.6

Amortization, net of accretion

581.2

601.7

Depreciation expense

81.7

77.7

Share-based compensation

130.7

124.3

Excess tax benefits from share-based compensation

—

(48.7

)

Changes in operating assets and liabilities:

Receivables, net

611.6

(176.2

)

Other invested assets

(26.2

)

(17.7

)

Other assets

(517.0

)

(925.2

)

Policy liabilities

274.6

(249.5

)

Unearned income

969.8

467.9

Accounts payable and accrued expenses

563.7

86.9

Other liabilities

251.0

381.6

Income taxes

356.2

410.6

Other, net

(52.1

)

(53.9

)

Net cash provided by operating activities

5,486.0

2,993.4

Investing activities

Purchases of fixed maturity securities

(10,270.5

)

(7,624.0

)

Proceeds from sales and maturities of fixed maturity securities

9,055.9

6,980.3

Purchases of equity securities

(481.3

)

(1,178.3

)

Proceeds from sales of equity securities

620.8

1,210.4

Purchases of other invested assets

(252.8

)

(348.3

)

Proceeds from sales of other invested assets

163.7

273.1

Change in collateral and settlements of non-hedging derivatives

64.9

(21.0

)

Changes in securities lending collateral

172.5

(58.4

)

Purchases of subsidiaries, net of cash acquired

(33.9

)

—

Net purchases of property and equipment

(512.9

)

(415.6

)

Other, net

11.9

(3.0

)

Net cash used in investing activities

(1,461.7

)

(1,184.8

)

Financing activities

Net proceeds from/(repayments of) commercial paper borrowings

686.5

(177.5

)

Net proceeds from/(repayments of) short-term borrowings

740.0

(100.0

)

Net repayments of long-term borrowings

(929.9

)

—

Changes in securities lending payable

(172.5

)

58.4

Changes in bank overdrafts

(126.5

)

311.5

Proceeds from sale of put options

0.9

—

Repurchase and retirement of common stock

(1,635.4

)

—

Change in collateral and settlements of debt-related derivatives

(175.6

)

(1,034.0

)

Cash dividends

(525.4

)

(512.7

)

Proceeds from issuance of common stock under employee stock plans

177.6

91.2

Taxes paid through withholding of common stock under employee stock
plans

(46.0

)

(63.6

)

Excess tax benefits from share-based compensation

—

48.7

Net cash used in financing activities

(2,006.3

)

(1,378.0

)

Effect of foreign exchange rates on cash and cash equivalents

3.9

1.9

Change in cash and cash equivalents

2,021.9

432.5

Cash and cash equivalents at beginning of year

4,075.3

2,113.5

Cash and cash equivalents at end of period

$6,097.2

$2,546.0

Anthem, Inc.

Reconciliation of Medical Claims Payable

Nine Months EndedSeptember 30

Years Ended December 31

2017

2016

2016

2015

2014

(In millions)

(Unaudited)

(Unaudited)

Gross medical claims payable, beginning of period

$

7,892.6

$

7,569.8

$

7,569.8

$

6,861.2

$

6,127.2

Ceded medical claims payable, beginning of period

(539.1

)

(645.6

)

(645.6

)

(767.4

)

(23.4

)

Net medical claims payable, beginning of period

7,353.5

6,924.2

6,924.2

6,093.8

6,103.8

Business combinations and purchase adjustments

—

—

—

121.8

—

Net incurred medical claims:

Current year

53,505.6

49,091.4

66,371.4

60,708.4

56,305.8

Prior years redundancies(1)

(1,066.3

)

(772.8

)

(850.4

)

(800.2

)

(541.9

)

Total net incurred medical claims

52,439.3

48,318.6

65,521.0

59,908.2

55,763.9

Net payments attributable to:

Current year medical claims

45,998.2

42,331.9

59,156.6

54,067.7

50,353.9

Prior years medical claims

5,932.1

5,835.5

5,935.1

5,131.9

5,420.0

Total net payments

51,930.3

48,167.4

65,091.7

59,199.6

55,773.9

Net medical claims payable, end of period

7,862.5

7,075.4

7,353.5

6,924.2

6,093.8

Ceded medical claims payable, end of period

101.4

397.5

539.1

645.6

767.4

Gross medical claims payable, end of period

$

7,963.9

$

7,472.9

$

7,892.6

$

7,569.8

$

6,861.2

Current year medical claims paid as a percentage of current year net
incurred medical claims

86.0

%

86.2

%

89.1

%

89.1

%

89.4

%

Prior year redundancies in the current year as a percentage of prior
year net medical claims payable less prior year redundancies in the
current year

17.0

%

12.6

%

14.0

%

15.1

%

9.7

%

Prior year redundancies in the current year as a percentage of prior
year net incurred medical claims

1.6

%

1.3

%

1.4

%

1.4

%

1.0

%

(1) Negative amounts reported for net incurred medical
claims related to prior years result from claims being settled for
amounts less than originally estimated.

Anthem, Inc.GAAP Reconciliation(Unaudited)

Anthem, Inc. has referenced “Adjusted Net Income” and “Adjusted Net
Income Per Share,” which are non-GAAP measures, in this document. These
non-GAAP measures are not intended to be alternatives to any measure
calculated in accordance with GAAP. In addition to these non-GAAP
measures, references are made to the measures “Operating Revenue” and
“Operating Gain.” Each of these measures is provided to further aid
investors in understanding and analyzing the company’s core operating
results and comparing Anthem, Inc.’s financial results. A reconciliation
of Operating Revenue to Total Revenue is set forth in the Consolidated
Statements of Income herein. A reconciliation of the non-GAAP measures
to the most directly comparable measures calculated in accordance with
GAAP, together with a reconciliation of reportable segments operating
gain to income before income tax expense, is reported below.

Three Months EndedSeptember 30

Nine Months EndedSeptember 30

(In millions, except per share data)

2017

2016

Change

2017

2016

Change

Net income

$

746.9

$

617.8

20.9

%

$

2,612.1

$

2,101.4

24.3

%

Add / (Subtract):

Net realized (gains)/losses on financial instruments

(114.7

)

(88.8

)

(138.2

)

23.8

Other-than-temporary impairment losses recognized in income

5.6

11.0

20.9

103.6

Transaction related costs

6.3

71.6

157.2

246.2

Income tax true-up of prior transaction costs

—

—

(69.3

)

—

2015 cyber attack litigation settlement

—

—

115.0

—

Amortization of other intangible assets

41.9

47.4

124.3

145.7

Penn Treaty assessment costs

—

—

253.8

—

Deferred tax asset write-off from California tax legislation

—

—

—

20.7

Tax impact of non-GAAP adjustments

21.6

(2.2

)

(190.4

)

(166.1

)

Net adjustment items

(39.3

)

39.0

273.3

373.9

Adjusted net income

$

707.6

$

656.8

7.7

%

$

2,885.4

$

2,475.3

16.6

%

Net income per diluted share

$

2.80

$

2.30

21.7

%

$

9.70

$

7.84

23.7

%

Add / (Subtract):

Net realized (gains)/losses on financial instruments

(0.43

)

(0.33

)

(0.51

)

0.09

Other-than-temporary impairment losses recognized in income

0.02

0.04

0.08

0.39

Transaction related costs

0.02

0.27

0.58

0.92

Income tax true-up of prior transaction costs

—

—

(0.26

)

—

2015 cyber attack litigation settlement

—

—

0.43

—

Amortization of other intangible assets

0.16

0.18

0.46

0.54

Penn Treaty assessment costs

—

—

0.94

—

Deferred tax asset write-off from California tax legislation

—

—

—

0.08

Tax impact of non-GAAP adjustments

0.08

(0.01

)

(0.71

)

(0.62

)

Rounding Impact

—

—

—

—

Net adjustment items

(0.15

)

0.15

1.01

1.40

Adjusted net income per diluted share

$

2.65

$

2.45

8.2

%

$

10.71

$

9.24

15.9

%

Full Year 2017 Outlook

Net income per diluted share

$10.80 - $10.90

Add / (Subtract):

Net realized (gains)/losses on financial instruments

(0.51

)

Other-than-temporary impairment losses recognized in income

0.08

Transaction related costs

0.58

Income tax true-up of prior transaction costs

(0.26

)

2015 cyber attack litigation settlement

0.43

Penn Treaty assessment costs

0.94

Amortization of other intangible assets

Approximately $0.60

Tax impact of non-GAAP adjustments

Approximately ($0.76)

Net adjustment items

Approximately $1.10

Adjusted net income per diluted share

$11.90 - $12.00

Three Months EndedSeptember 30

Nine Months EndedSeptember 30

(In millions)

2017

2016

Change

2017

2016

Change

Reportable segments operating gain

$

982.0

$

1,078.1

(8.9

)%

$

3,794.4

$

4,148.7

(8.5

)%

Net investment income

220.2

200.9

627.6

566.9

Net realized gains/(losses) on financial instruments

114.7

88.8

138.2

(23.8

)

Other-than-temporary impairment losses recognized in income

(5.6

)

(11.0

)

(20.9

)

(103.6

)

Interest expense

(150.5

)

(172.9

)

(575.4

)

(545.7

)

Amortization of other intangible assets

(41.9

)

(47.4

)

(124.3

)

(145.7

)

Income from continuing operations before income tax expense

$

1,118.9

$

1,136.5

(1.5

)%

$

3,839.6

$

3,896.8

(1.5

)%

Forward-Looking Statements

This document contains certain forward-looking information about us
that is intended to be covered by the safe harbor for “forward-looking
statements” provided by the Private Securities Litigation Reform Act of
1995. Forward-looking statements are generally not historical facts.
Words such as “expect,” “feel,” “believe,” “will,” “may,” “should,”
“anticipate,” “intend,” “estimate,” “project,” “forecast,” “plan” and
similar expressions are intended to identify forward- looking
statements. These statements include, but are not limited to: financial
projections and estimates and their underlying assumptions; statements
regarding plans, objectives and expectations with respect to future
operations, products and services; and statements regarding future
performance. Such statements are subject to certain risks and
uncertainties, manyof which are difficult to predict and
generally beyond our control, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking statements. These risks and uncertainties include: those
discussed and identified in our public filings with the U.S. Securities
and Exchange Commission, or SEC; increased government participation in,
or regulation or taxation of, health benefits and managed care
operations, including, but not limited to, the impact of the Patient
Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010, or Health Care Reform, and the impact of any
future modification, repeal or replacement of Health CareReform;
trends in health care costs and utilization rates; our ability to secure
sufficient premium rates including regulatory approval for and
implementation of such rates; our participation in federal and state
health insurance exchanges under Health Care Reform, which have
experienced and continue to experience challenges due to implementation
of Health Care Reform, and which entail uncertainties associated with
the mix and volume of business, particularly in our Individual and Small
Group markets, that could negatively impact the adequacy of our premium
rates and which may not be sufficiently offset by the risk apportionment
provisions of Health Care Reform; the ultimate outcome of litigation
between Cigna Corporation (“Cigna”) and us related to the merger
agreement between the parties, including our claim for damages against
Cigna, Cigna’s claim for payment of a termination fee and other damages
against us, and the potential for such litigation to cause us to incur
substantial costs, materially distract management and negatively impact
our reputation and financial positions; our ability to contract with
providers on cost-effective and competitive terms; competitor pricing
below market trends of increasing costs; reduced enrollment, as well as
a negative change in our health care product mix; risks and
uncertainties regarding Medicare and Medicaid programs, including those
related to non-compliance with the complex regulations imposed thereon
and funding risks with respect to revenue received from participation
therein; a downgrade in our financial strength ratings; increases in
costs and other liabilities associated with increased litigation,
government investigations, audits or reviews; medical malpractice or
professional liability claims or other risks related to health care
services provided by our subsidiaries; our ability to repurchase shares
of our common stock and pay dividends on our common stock due to the
adequacy of our cash flow and earnings and other considerations;
non-compliance by any party with the Express Scripts, Inc. pharmacy
benefit management services agreement, which could result in financial
penalties;our inability to meet customer demands, and sanctions
imposed by governmental entities, including the Centers for Medicare and
Medicaid Services; events that result in negative publicity for us or
the health benefits industry; failure to effectively maintain and
modernize our information systems; events that may negatively affect our
licenses with the Blue Cross and Blue Shield Association; state guaranty
fund assessments for insolvent insurers; possible impairment of the
value of our intangible assets if future results do not adequately
support goodwill and other intangible assets; intense competition to
attract and retain employees; unauthorized disclosure of member or
employee sensitive or confidential information, including the impact and
outcome of investigations, inquiries, claims and litigation related to
the cyber attack we reported in February 2015; changes in economic and
market conditions, as well as regulations that may negatively affect our
investment portfolios and liquidity; possible restrictions in the
payment of dividends by our subsidiaries and increases in required
minimum levels of capital and the potential negative effect from our
substantial amount of outstanding indebtedness; general risks associated
with mergers, acquisitions and strategic alliances; various laws and
provisions in our governing documents that may prevent or discourage
takeovers and business combinations; future public health epidemics and
catastrophes; and general economic downturns. Readers are cautioned not
to place undue reliance on these forward-looking statements that speak
only as of the date hereof. We do not undertake to update or revise any
forward-looking statements, except as required by applicable securities
laws. Investors are also advised to carefully review and consider the
various risks and other disclosures discussed in our SEC reports.